Source: Thought Catalog – Unsplash
- Global macro fears and the upcoming Fed action of a rate hike have put pressure on the entire crypto space.
- As Bitcoin loses its crucial 200 WMA support, the bigger question remains, will it dip back to the June lows?
It appears that the crypto party is coming to an end as Bitcoin and the broader cryptocurrency market have corrected by 7 percent over the past 24 hours. At press time, Bitcoin is trading down 7.25 percent at a price of $21,787 and a market cap of $416 billion. Since peaking at $25,000 last week, Bitcoin has corrected more than 15 percent so far.
Also, Bitcoin has lost over $1 trillion in valuations since hitting its all-time high in November 2021. The recent price correction in bitcoin and the broader crypto space has been attributed to the Fed’s upcoming rate hike next month. Although the July inflation data is showing signs of cooling, it is still considerably high at 8.5 percent.
Earlier, the US Federal Reserve made it clear that its primary goal is to keep inflation within the allowable 2 percent limit. Several market experts are predicting a 75 basis point hike next month is very likely.
As the Fed turns hawkish, it will put pressure on risk-on assets. Therefore, money is likely to flow out of the stock and crypto market in the future. Jamie Douglas Coutts, senior market structure analyst at Bloomberg Intelligence, said:
In the near term, correlation risks are increasing as equities, particularly technology stocks, moderately balance at key resistance levels.
Bitcoin falls below 200 WMA and turns bearish
Coming back to Bitcoin, BTC price has fallen below the 200-week moving average (WMA) to around $23,000. This is a crucial long-term support and any price below it suggests weakness.
In a note to clients, Craig Erlam, Senior Market Analyst at Oanda, wrote:
The rally that brought it back to $25,000 has lost significant momentum and that could weigh more on the price. A move below $22,500 could indicate that the rally has run its course for now.
On the other hand, experts point out that there is a pause in the accumulation of bitcoins, even by the long-term holder. It will be interesting to see if Bitcoin can sustain above $20,000 or dip back to the June lows of $17,500.
Altcoins fall sharply
Along with bitcoin, the broader cryptocurrency market is down 7 percent and is on the verge of falling below the $1 trillion mark. The world’s second-largest cryptocurrency, Ethereum (ETH), plunged 7 percent to slip below $1,750. It looks like the euphoria surrounding the merge upgrade next month is slowly fading.
Other altcoins saw a bigger drop, with corrections ranging from 10 to 20 percent. It will be interesting to see if the bulls bounce back or if greater macroeconomic pressures are driving prices even lower.
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